5 Financial Signposts to Small Business Success

By: SearchItLocal

Business

Running you own business, being the master of your own domain. Its heady stuff, imbued with intoxicating thoughts of wealth, borne of your insights and acuity, with recognition as the reward of your success. On the basis of “don’t die wondering” alone, if you have the passion and the opportunity it’s almost a matter of destiny.

Almost of course, because real world pressures can present seemingly insurmountable challenges. But once it is challenge accepted, it’s beholden on you to stop, look and listen.

1. A GOAL WITHOUT A PLAN IS JUST A WISH

So, whether you’re formulating a start-up with all the hopes and dreams that go with it or you’re running a SME with the potential to go the “next step”, getting your numbers right at the outset is everything.

When it comes to “good news, bad news” it’s best to take a pragmatically pessimistic view first.

In other words, according to the Australian Bureau of Statistics, around 60% of small businesses cease trading within the first three years. This is worth bearing in mind for a number of reasons, not the least of which is getting your business plan as comprehensive – and as accurate – as possible. If you fail to plan you plan to fail.

Whether you’re formulating a start-up with all the hopes and dreams that go with it or you’re running a SME with growth potential, getting your numbers right is everything.

There are innumerable factors that can and will influence your business performance, but unless you’re realistic in planning the journey, you run the very real risk of being way off course when the cold winds blow.

But enough with the “glass is half empty” nihilism. You’re devoting your passion and your positive energy to achieving the success you envision. And…

2. YOU’RE NOT ALONE

Whether you’re a sole trader or in charge of a burgeoning team of talents, you need advice. Going one step further, you need to heed advice. After you’ve crystallised the vision statement, scrutinised the channels to market and crunched the numbers you need someone with fresh eyes, relevant experience and a deep and empathetic understanding of your aspirations.

A mentor, business coach, a seasoned even suitably sceptical elder statesperson – the right person can be invaluable when it comes to sifting through potential weaknesses and even more importantly underscoring your self-belief with positive feedback and constructive advice. Even the best in the business swear by the value of mentorship.

Take it from Steven Spielberg… “The delicate balance of mentoring someone is not creating them in your own image, but giving them the opportunity to create themselves.” Wise words.

3. ACCOUNTING FOR IT

A more formal arrangement, finding the right accountant who can appreciate your lofty vision but keep your feet on the ground is a deal breaker.

From the relatively straightforward tasks like bookkeeping to strategic advice encompassing everything from invoicing to tax structures and even government grants, the right accountant is worth his or her weight in gold. So you need to look for a certified or chartered accountant with expertise that’s relevant to the business sector you’re working in.

It’s a partnership – probably one of the strongest ones you’ll develop in growing your business. To consider professionals with the qualifications and expertise you need, head for an association like CPA Australia’s Find A CPA portal. They will help you find publicly certified accountants to consider with a view to deciding on the one you want.

Then go online, look at their websites and look for referrals or comments about them including through their social media accounts and other online forums. Once you’ve honed a shortlist, pick up the phone and get talking, then refine that even further to the ones you’d like to interview in person.

4. WHERE TO NOW?

The quintessential “chicken and egg” scenario. Putting the banks to one side, most commercial lenders want to see at least six months trading performance to establish credit worthiness. And that entails generating real profits over operating expenses to demonstrate you can meet loan requirements.

Then – and this is a segue from planning, accounting advice and mentorship - you need to identify the type of loan based on your unique circumstances. It could be an up-front advance, an overdraft or a line of credit. It could be based on a short term loan or a scheduled repayment program spanning anything up to five years.

Business lending company Max Funding say, “both your personal credit history and your preparedness to put up your assets as collateral also come into play”.

With this latter aspect you need to think long and hard about putting something as emotionally valuable as residential assets on the line and the ramifications this could have for your family. Again, this is where enthusiasm and aspirations need to be tempered by pragmatism. And again, this is where external, professional advice can be invaluable.

5. ASK "BIG BROTHER"

Three little letters – A T O – can fuel a lot of trepidation. No one likes a call from the their dentist, proctologist or the tax man. But in this instance the people in both federal and state governments are here to help because it’s in the nation’s best interests to see SMEs continue to fuel the economy. With over 5.7 million voters working in small businesses, this makes political as well as fiscal sense.

The Australian Taxation Office website has a Support Your Small Business portal brimming with resources dedicated to small business and it’s well worth a visit when you’re in the planning stages, particularly when it comes to the financial structuring of your enterprise. The Federal Government’s Small Business website is also a great place to start.

And start you must.

Going back to that “don’t die wondering” maxim, if the opportunity is there and the time is right – and your loved ones are willing to go on the journey with you – it’s all up to you. Look, listen, learn. And then act!